26
NUMMER 11 I 21 JUNI
ASSIGNED CONCESSIONS REMAIN INTACT, BUT GREEN SUBSIDIES NEED TO BE REDUCED
Fourth offshore windmill park in Belgium is running
BRUSSELS In the Belgian coastal town of Oostende the new offshore wind mill park Nobelwind has recently been opened, although it has been running since May. It is located 50 kilometers off the coast and has a 165 megawatt (MW) capacity, which is enough to provide 180,000 families with electricity. It is the fourth offshore windmill park off the Belgian coast, the third one built by the Parkwind consortium, which is working closely with the Dutch Meewind Corporation and the Japanese company Sumitomo.
JAN SCHILS
Parkwind is a consortium of the Flemish supermarket chain Colruyt and the Flemish investment company PMV and Korys, a holding belonging to the Colruyt family. They previously built the offshore windmill parks Belwind and Northwind. Building Nobelwind involved a 600 million euro investment. Together with the investments in Belwind and Northwind this amounts to a total sum of 2 billion euros, for these three windmill parks, of which 70 percent was financed by banks. Together they have a 552 MW capacity (178 windmills). Which allows them to supply 600,000 families with electricity. According to François de Leeuw, CEO of Parkwind. He stresses that Parkwind owns yet another concession, to build a fourth offshore windmill park (North- wester II) off the coast. If all formalities are over quickly, Van Leeuw is hoping to start building next year, and then the fourth offshore windmill park will be working by 2019.
Coalition partners tell De Backer to back off While the Belgian Offshore Platform (BOP), which looks out for the interests of all of those involved in offshore wind energy doesn’t shy away from hitting the point home that the players’ legal position is pivotal when it involves large investments in energy, the Belgian government is yet to decide what to do with Secretary of State’s De Backers proposal to revoke the concessions for the three windmill parks which are going to be built in the North Sea, and to put them back on the market through tenders. This involves Northwester II (by Parkwind), Seastar and Mermaid. Even though the decision still needs to be made by the government (probably mid-July when summer recess is about to start), it has become clear that De Backer’s plans are about to fall through. Because he lacks the necessary political support from his own party members and the other members of parliament, as well as the coalition partners from the NVA, CD&V and the Liberals. “We will no longer need to try to save this sinking ship,” said a spokesman of the liberals from Wallonia. De Backer wanted to save up to 3.5 billion euros in subsidies for the three windmill parks, but its coalition partners fear this will lead to claims for millions of dollars from the companies which would suffer huge financial losses if the concessions were to be revoked. Because the subsidies for windmill parks are under huge pressure internationally, such as in Germany where a park will be built without subsidies by 2025, the coalition partners do want the Backer to negotiate with the builders of the three offshore windmill parks to reduce them from 3 to 2 billion dollars, without revoking their concessions. The three windmill parks are respectively called Mermaid (54 km off the coast, 266-288 MW), Seastar (40 km off the coast an 242-256 MW) and Northwester II (51 km off the coast, 224 MW). According to a spokesman from the Belgian government it is clear that the companies involved will have to put up with some cutbacks, because the
previously agreed upon figure of 120 euros per megawatt/hour is no longer feasible, especially because in the Netherlands they came up with 50 to 70 euros per megawatt/ hour. For the three offshore windmill parks this would amount to a difference of 2 to 3 billion euros in subsidies over the course of twenty years. That’s why government support should be reduced according to the spokesman, which need not mean the concessions will be revoked. When the three concessions were approved, 107 euros of support per produced megawatt hour was agreed upon for a period of twenty years. For large windmill parks this got reduced to 90 euros per produced megawatt hour above a certain limit. The proposal was a reaction to the news that the Danish energy company Dong is going to build an offshore windmill park by 2025 off the German coast based on the electricity it sells, without making use of green subsidies. According to De Backer the Belgian concession system could be designed in such a way that it would amount to a 3.5 billion euros in cost reductions for the Belgian government. He referred to the Dutch and German situation, but he soon learned from experts that the two are incomparable. He also received criticism from all sides especially because it was deemed unethical to keep withdrawing concessions which have already been assigned, and investments have already been made in preparation. According to CEO Van Leeuw its investors won’t be swayed by these signals, coming from the Belgian government, which implies subsidies for offshore wind energy are a thing of the past.
Concessions According to the BOP withdrawing these concessions, which are written up in the Ministerial Agreement, would mean a travesty to justice. In order to build these three parks millions of euros have already been invested to develop them. When these concessions are withheld, the government would not be stepping up to the plate in achieving their goals in renewable energy and the reduction of CO2 emissions which need to be met by 2020. “The BOP believes the producers of these three parks are perfectly capable of building them within the current legislation and conditions. The BOP recalls how on the 13th of April friends and foes were blown away by the spectacular news from Germany: how since offshore wind originated it has amounted to a 1.4 GW capacity without government support. Since 2013 the BOP is carrying out a bench- mark, together with an educational bureau, in order to keep track of the annual market evolution of offshore wind energy. Results show huge fluctuations in pricing within a country, in terms of offshore wind, the legislation, connections to the network and other parameters. Average costs for offshore wind in Belgium are below European average. When similar projects are compared, we see, according to the BOP that costs of German projects such as Merkur, are of similar price as a Belgian offshore project being produced, namely 124 euros/MWh. Gemini, an offshore wind park which was built in the Netherlands in 2017, costs, in terms of Belgian parameters 123.5 euros/MWh. Bloomberg (BNEF) calculates the average costs of offshore wind all over the world every six months and they came up with a figure of 126 $/MWh. The BOP emphasizes the support from the European Commission, for DG Concurrentie, which was approved in December 2016. It explicitly stipulated there was no overcompensation in the Belgian system, which silenced the supporters of the bill to reduce or put a stop to green subsidies.
Revolution According to the BOP there has been an unexpected and spectacular turn for the offshore wind energy market in the second half of 2016: in the Netherlands, Denmark and Germany exceptionally low prices were being offered for offshore wind projects. Analysts were calling it a true revolution for the offshore wind sector. “One should bear in mind these biddings are future projects. For the German projects the final investments will be decided upon in 2021, which will probably be fully operational by 2025”, according to the BOP. Moreover, it should be noted that the same bidder is in need of support in other locations and elsewhere (The UK). This shows once again that costs vary per project and are being decided upon in terms of their specific location, connection to the net, the chosen technology (in Germany they are discussing wind turbines which are not available of 13-15 MW), the existing legislation etc. The Belgian projects which are being produced as we speak were agreed upon in 2012 and since then millions of euros were invested to develop them. According to the BOP these three projects are waiting for a clear framework, in order to decide upon investments so that they will be able to deliver green energy by 2020. These offshore wind parks would be able to make a significant contribution to the Belgian 2020 renewable energy- and climate goals. These parks each have different characteristics. Taking into account the recent evolution in pricing for offshore wind, for the specific Belgian context. With the different govern- ment bodies involved it is necessary to come to an agreement to support these projects in a way that suits the market. In terms of the renewal of the Marien Ruimtelijk Plan (MRP) the BOP is saying it will work hard to obtain new room within the Belgian North Sea aſter 2020, in order to garner another 2000 MW of wind energy. When certain conditions are being met for these future locations, it is to be expected that within the Belgian North Sea it is possible to deliver at significantly lower prices for offshore wind.
Lower costs good news According to the BOP these lower costs for offshore wind, with future developments possibly without support, are very good news, both for the consumer and the offshore wind industry. This young industry is already creating future value, jobs and has a positive influence on the trade balance and other positive effects on socioeconomics, according to the BOP and the platform: “the competitive costs of this CO2-neutral energy technology offer interesting perspectives for further development of wind energy at sea on a large scale, in Belgium, Europe and the rest of the world. The Belgian offshore wind industry was one of the first to jump into this innovative technology and is now exporting their know- how to Europe and international projects”. When all goes according to plan, the total sum of offshore wind energy will amount to 2142 MW in Belgium by 2020, comprising 7 percent of the total usage of electricity in the country. This could be adding up to an additional 2000 MW when the previously mentioned MRP would come into being in future years, making it a sum total of 4241 MW.
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